1- use a gold or platinum credit card to purchase your iPod it and you will get coverage for the 2nd year free.
2- Buy an extended warranty + accidental damage from SquardeTrade using a 30% off coupon from RetailMeNot and 3 years coverage for a $300 iPod will cost you $49, a $280 iPod is $39, and a $230 iPod is $35.
I haven't used SquareTrade, but people on other gadget boards swear by them and have had excellent service.